Powered by the People

Inside Consolidated Diesel's factory, the equipment that's used to make engines looks completely ordinary. But the trust that's used to build teams produces extraordinary results.

By
Curtis Sittenfeld

At first glance, it's a factory just like any other factory. The Consolidated Diesel Co. facility, in Whitakers, North Carolina, is a 1.2-million-square-foot plant where 1,700 employees turn out 650 engines per day in four different models, each of which can be configured in any of more than 3,500 different ways. There is nothing novel about the plant's assembly line. There is nothing sexy about its product. But inside this factory, something revolutionary is going on.

Formed in 1980 as a joint venture between Cummins Engine Co. and J.I. Case Corp., Consolidated Diesel's plant represents an ongoing social experiment that poses a deceptively simple question: Will granting people an extraordinary level of responsibility allow them to achieve an extraordinary level of performance? After 19 years, the same answer keeps coming back: Yes.

Take a look at some traditional performance measures. Every 72 seconds, an engine comes off the assembly line, destined for use in a tractor, a combine, a truck, or a bus. The plant's official revenues for 1998 were about $250 million — a figure that's actually misleading, because Consolidated Diesel sells its products to its parent companies at cost. The plant's turnover rate is less than 2%, and the factory has never suffered a major layoff. While most plants average 1 supervisor for every 25 employees, Consolidated Diesel has 1 for every 100 employees — a difference that yields a savings of about $1 million a year. The plant's injury rate is about one-fifth that of the national average.

Then look at some of the intangible measures that relate to morale, learning, trust, and personal growth. "In the right environment, people at all levels of an organization can make contributions," explains Jim Lyons, 47, general manager at Consolidated Diesel. "The people who are closest to the work are the ones who typically understand that work best."

Teamwork Is the Engine

Talk to just about anyone in this plant, and you're likely to hear the same refrain: Consolidated Diesel's success can be traced to one thing — its teams. Since its inception, the plant has relied on a "sociotechnical" approach to work — on what Consolidated Diesel calls a "team-based system." That approach grew out of studies from the late 1940s involving British coal miners. Researchers found that when people have a say in determining how they work, they are both more satisfied and more productive.

Consolidated Diesel has embraced that finding, developing policies and practices in four key areas. First, the company plays fair. For example, when it comes to bonuses, either everyone gets one or no one does. Fairness is also evident in the plant's schedule, which switches entire teams from a day shift to a night shift every two weeks.

Second, the company uses extensive cross-training. One day, a team member might be doing quality inspection; the next day, that same person might be working a machine. "When you do a job that somebody else has done, you have a lot more respect for what that job involves," says Richard Strawbridge, 53, an 11-year veteran of the plant, who works in electrical and mechanical maintenance. "That understanding builds cooperation in a team."

Third, Consolidated Diesel listens to its employees and involves them in designing solutions to problems in the plant. In the fall of 1998, for example, customer demand was so high that the assembly and process teams had to work huge amounts of overtime. "We added a third-shift skeleton crew, but there was only incremental improvement," says Lyons. "Then we got our team leaders involved, and they asked their teams, 'How should we handle this?' "

The teams designed new schedules that allowed for more flexibility. Shifts suddenly decreased in length from 9 or 10 hours to 8 hours — and no one was working Saturdays anymore. "Sometimes the fact that it's the teams' plan, and not a plan dictated by management, means everything," Lyons says. "The teams will make it work."

Finally, teams at Consolidated Diesel have responsibility that matters. For example, they hire — and, when necessary, fire — their own members. "The teams solve a lot of our problems," says Strawbridge. "When I came here, I realized that in other places where I had worked, decisions had been made for me. Here I'm required to be involved in the decision-making process."

High Goals Drive Performance

Consolidated Diesel has high expectations — and offers commensurate rewards: Employees who perform well are often promoted. John Judd, now 30, started working on the shop floor in the summer of 1988. After 11 years and four promotions, he is now an assembly manager — a role in which he divides his time between working to improve assembly-line operations and working on engineering challenges. "And all of this after coming here just to build diesel engines," he says. "The company has allowed me to move and to advance continuously."

"Expectations in a team environment are much higher here than at any other place where I've worked," says Larry Williams, 42, director of human resources. "And a lot of those expectations are ones that we place on ourselves. Being part of a team creates a different sense of accountability. Everybody expects more from everybody else."

The Good, the Bad, and the Ugly

Information is the lifeblood of any team-based system. That's why Jim Lyons (like other managers at the company) takes an hour or two every day to walk around the shop floor, the offices, and the lab. "You want to remove all unnecessary barriers between management and the workforce," says Lyons. That's also why he never wears a tie at work, and why he considers it a point of pride that 90% of the plant's employees call him by his first name. "And this is the South, where people are very, very respectful," he laughs.

Opening the channels of communication can take other forms too: When Lyons arrived at Consolidated Diesel, management held two state-of-the-plant meetings each quarter, with one meeting taking place on each of two shifts. Those meetings were an efficient way to relay information — but Lyons found that their size defeated their purpose. Holding them in front of an audience of as many as 700 employees eliminated any chance for dialogue.

To solve that problem, Lyons divided the 1,400 employees into 15 groups, all of which meet separately over a two-day period. The audiences are now a fraction of their previous size, and the number of questions that they ask — ranging from "Are we going to close the plant?" to "Are we going to expand the plant?" — has quadrupled.

"We share the good, the bad, and the ugly," Lyons says. When he is unable to provide an answer on the spot, Lyons follows up in "CDC Wire," Consolidated Diesel's weekly in-house newsletter, or on WCDC, the plant's closed-circuit television network. It's all part of the mix of philosophy and practice that sets Consolidated Diesel apart. "When good people are given good information," Lyons says, "they typically make good decisions."